Nonetheless, over the next several decades,
China would systematically engage in unfair trade practices.
Such practices range from currency manipulation and
the use of the illegal export subsidies to the theft of intellectual property.
And the requirement of forced technology transfer for
foreign corporations entering the Chinese market.
>> Simply an undervalued currency makes Chinese coffee makers $10 a piece instead
of 15 or 20, and it makes American cars in China $30,000 instead of 25.
>> In addition, China would benefit unfairly from it's use of sweat shops and
from it's role as a pollution haven.
Benefits that resulted from a set of Chinese environmental and health and
safety regulations much laxer than many of it's competitors.
>> I had a plywood manufacturing facility in Bowling Green,
Kentucky selling plywood to furniture manufacturers in the United States.
In 2002 all my competitors were moving to China, essentially I had two choices,
I shut the company down or I move it to China.
And I opened up three factories in China, and delivered to the customer
in the United States 50% cheaper than I could make it in Bowling Green.
Manipulating the currency was a huge help for me because it kept our prices down.
I had no environmental issues, and,
the most important thing was that I could sell my product at cost.
And every month, the Chinese government would send me a check for
17% of my exports, and that was my net margin and my profit.
>> The mercantile as a result would be a massive structural shift
in manufacturing to China, at the expense of growth and
jobs in many other countries and regions around the world.
And those harmed by Chinese unfair trade practices,
would include both the United States and Europe, as well as Australia, Canada,
Mexico, and much of Asia, Latin America and Africa.
This was certainly not how David Ricardo envisioned free trade, nor,
did Ricardo anticipate the ability of China
to maintain chronic trade surpluses in a world where currency adjustments
are supposed to automatically correct any trade imbalances between nations.
